Key Takeaways
- U.S. Bancorp raised its quarterly dividend 3.8% to $0.54 a share in September, its second 2-cent raise in two Septembers.
- The dividend is well-covered, at 44% of normalized EPS in fiscal 2025 and about 40% of what analysts expect for 2026.
- Analysts expect normalized EPS to grow about 12% a year through fiscal 2028, against about 4% a year for the dividend.
- The 3.5% yield is a safe but slow check, at a valuation close to the stock’s five-year average on tangible book value.
U.S. Bancorp (USB) raised its quarterly dividend to $0.54 a share in September, up 2 cents, or 3.8%. That works out to $2.16 a year, and the first check at the new rate went out Oct. 15.
At that rate, the stock yields 3.54%. For income investors, the question is whether that’s a good deal for a dividend that grows this slowly.
Two cents, right on schedule
This is the second September in a row that U.S. Bancorp has added 2 cents to its quarterly payout. Last year it went from $0.50 to $0.52, according to StockAnalysis’s dividend history, which also counts 15 straight years of dividend growth. On TIKR’s figures, the dividend per share rose from $1.93 in fiscal 2023 to $2.04 in fiscal 2025, or 2.8% a year. So the raise is reliable, and it’s small.
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Plenty of room under the dividend
A bank’s dividend is judged on its earnings. U.S. Bancorp’s dividend is well-covered, using just 44% of its normalized EPS in fiscal 2025. StockAnalysis puts the payout over the last 12 months at a similar 42% of reported earnings. Analysts expect earnings to grow far faster than the dividend over the next three years:
The consensus has normalized EPS rising from $4.62 in fiscal 2025 to $6.47 in fiscal 2028, about 12% a year. Over the same years, it has the dividend rising about 4% a year, to $2.30. The new $2.16 rate is about 40% of the $5.34 that analysts expect for 2026, and a dividend raise gives no reason to change those earnings estimates.
So the bank could afford raises bigger than 2 cents a year. For now, it keeps most of what it earns.
A fair price for the yield
A 3.5% yield is only as good as the price you pay for it, and for a bank, that price is best measured against tangible book value. U.S. Bancorp trades at 2.1x tangible book value, close to its five-year average of 2.0x:
Over those five years the multiple has ranged from 1.4x in May 2023 to 2.7x in January 2023. Today’s buyer isn’t getting a bargain, and isn’t overpaying either.
Safe, but slow
For an investor who wants a check that’s safe and grows a little every year, U.S. Bancorp’s 3.5% yield is enough. The payout leaves a wide cushion under the dividend, and you’re paying a normal price for the stock.
The downside is slow growth in the check. An investor who needs income to grow well ahead of rising prices will want more than 2 cents a year. The other risk to the check is one every bank carries: a downturn that pushes up loan losses and eats into earnings.
The next thing to watch is fourth-quarter results in January. If full-year normalized EPS lands near the $5.34 analysts expect, U.S. Bancorp will have room for a bigger raise next September. Whether it uses that room is up to its board.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
